VAT Daman Regulation 2005

8/3/2019 VAT Daman Regulation 2005

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(Refer Gazette copy for authentication)

2

Under

SectionI N D E X

Page

No.

4 Rate of tax. 10

5 Determination of taxable turnover. 119 Tax credit. 14

16 Composition Scheme for specified dealers. 21

18 Registration. 23

21 Amendment of registration. 26

22 Cancellation of Certificate of Registration. 27

26 Returns. 31

31 Self assessments. 32

33 Assessment of penalty. 33

38 Refunds. 35

43 Recovery of tax. 39

46 Special mode of recovery. 40

58 Audit. 49

59 Inspection of records. 49

60 Power to enter premises and seize records and goods. 50

61 Power search and detain goods vehicles. 51

68 Delegation of Commissioners powers. 56


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THE DAMAN AND DIU VALUE ADDED TAX REGULATION, 2005

Promulgated by the President in the Fifty-sixth Year of Republic of India.

A Regulation to consolidate and amend the law relating to levy of tax on sales or purchases of

goods in the Union territory of Daman and Diu and to provide for matters connected therewith or

incidental thereto.

In exercise of the powers conferred by article 240 of the Constitution, the President is pleased to

promulgate the following Regulation made by him:-

CHAPTER I

PRELIMINARY

1. (1) This Regulation may be called the Daman and Diu

Value Added Tax Regulation, 2005.

(2) It extends to the whole of the Union territory of Daman

and Diu.

(3) It shall come into force on such date as the

Administrator may, by notification, appoint, and different dates

may be appointed for different provisions of this Regulation and

any reference in any such provision to the commencement of

this Regulation shall be construed as a reference to the cominginto force of that provision.

Short title, extentand commencement.

Definitions. 2. In this Regulation, unless the context otherwise requires,-

(a) accountant means

(i) a chartered accountant as defined in clause (b)

of sub-section (1) of section 2 of the CharteredAccountants Act, 1949 and who has obtained a

certificate of practice under sub-section (1) of

section 6 of that Act; or

(ii) a person, who, by virtue of the provisions of

sub-section (2) of section 226 of the Companies

Act, 1956, is entitled to be appointed to act as

an auditor under that sub-section; or

(iii) an auditor appointed in pursuance of sub-section

(2) of section 619 of the Companies Act, 1956;

(b) Administrator means the Administrator of the Union

38 of 1949.

1 of 1956.

1 of 1956.


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territory of Daman and Diu appointed by the President

under article 239 of the Constitution;

(c) Appellate Tribunal means the Appellate Tribunal

constituted under section 73;

(d) business includes -

(i) any trade, commerce or manufacture,

(ii) any adventure or concern in the nature of trade,

commerce or manufacture,

(iii) any transaction in connection with, or incidental

or ancillary to, such trade, commerce,

manufacture, adventure or concern,

(iv) any occasional transaction in the nature of such

trade, commerce, manufacture, adventure or

concern whether or not there is volume,

frequency, continuity or regularity of such

transaction, and

whether or not such trade, commerce, manufacture, adventure or

concern transaction is carried on with a motive to make gain or

profit and whether or not any gain or profit accrues from such

trade, commerce, manufacture, adventure, concern or

transaction.

Explanation.- For the purposes of this clause

(A) any transaction of sale or purchase of capital assets

pertaining to such trade, commerce, manufacture,

adventure, concern or transaction referred to in sub-

clauses (i) to (iv) shall be deemed to be business;

(B) purchase of any goods, the price of which is debited in

the books of account of the dealer and sale of any goods,

the proceeds of which are credited in the books of

account of the dealer shall be deemed to be business;

(e) business premises means -

(i) the address of a dealer or, the place at which a dealer

carries on the business and which is registered as such;(ii) any building or place used by a person for carrying on

his business, but does not include the building or place

used for residential purposes;

(f) capital goods means plant, machinery and equipment

used in the trade or manufacturing of goods;

(g) casual trader means a person who, whether as

principal, agent or in any other capacity undertakes

occasional transactions in the nature of business

involving buying, selling, supply or distribution of

goods or conducting any exhibition-cum-sale in Daman


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and Diu whether for cash, deferred payment,

commission, remuneration or other valuable

consideration;

(h) Commissioner means the Commissioner of Value

Added Tax appointed under sub-section (1) of section66;

(i) dealer means any person who carries on business in

Daman and Diu and includes

(i) any person who for the purposes of, or in connection

with, or incidental to, or in the course of, his business

buys, sells, supplies or distributes goods directly or

otherwise, whether for cash or for deferred payment or

for commission, remuneration or other valuable

consideration;

(ii) any department of the Central Government or a State

Government, a local authority, Panchayat,

Municipality, Development Authority, Cantonment

Board and an autonomous or a statutory body or an

industrial, commercial, banking, insurance or trading

undertaking whether or not of the Central Government

or any of the State Governments or of a local authority,

if it buys, sells, supplies or distributes goods, in the

course of activities which may by notification specified

from time to time;

(iii) a factor, commission agent, broker, del credere agent,or any other mercantile agent by whatever name called,

who carries on the business of buying, selling,

supplying or distributing goods on behalf of any

principal, whether disclosed or not;

(iv) an agent of any of the persons referred to in sub-

clauses (iii) or (vi) or (vii) or (viii) or (ix) of clause (i),

whether or not the person referred to in the said sub-

clauses is a dealer residing in Daman and Diu;

(v) a local branch of a firm or company or association of

persons, outside Daman and Diu where such firm,company, association of persons is a dealer within the

meaning of sub-clause (i), or sub-clause (iii), or sub-

clause (vi), or sub-clause (vii), or sub-clause (viii), or

sub-clause (ix) of this clause;

(vi) a club, association, society, trust, or co-operative

society, whether incorporated or not, which buys goods

from, or sells goods to, its members for price, fee or

subscription, whether or not in the course of business;

(vii) an auctioneer, who sells or auctions goods belonging toany principal, whether disclosed or not and whether the

offer of the intending purchaser is accepted by him or


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by the principal or a nominee of the principal;

(viii) a casual trader; or

(ix) any person who, for the purposes of, or in connection

with, or incidental to, or in the course of, his business,

disposes of any goods as unclaimed or confiscated, orunserviceable or scrap, surplus, old, obsolete or as

discarded material or waste products by way of sale;

(j) Daman and Diu means the Union territory of Daman

and Diu;

(k) fair market value means the value at which goods of

like kind and quality are ordinarily sold or would be

sold in the same quantities between unrelated parties in

the open market at the same time in Daman and Diu;

(l) goods means every kind of moveable property (other

than newspapers, actionable claims, stocks, shares andsecurities) and includes -

(i) livestock, all materials, articles or commodities

including standing trees and things attached to

or forming part of the land which are agreed to

be severed before sale or under a contract of

sale; and

(ii) property in goods (whether as goods or in some

other form) involved in the execution of a works

contract, lease or hire-purchase or those to be

used in the fitting out, improvement or repair of

movable property;

(m) goods vehicle means a motor vehicle, vessel, boat,

animal and any other form of conveyance used for

carrying goods;

(n) Government means the Administrator;

(o) import means sale or purchase in the course of the

import of goods into the territory of India if the sale or

purchase either occasions such import or is effected by

transfer of document of title to the goods before the

goods have crossed the customs frontiers of India and

includes procurement of goods from outside the Damanand Diu either as a result of purchase or otherwise.

Explanation.- In the case of goods arriving in Daman and Diu

from a foreign country through customs, the import of the

goods in Daman and Diu shall occur at the place where the

goods are cleared by Customs for home consumption;

(p) in the course of includes activities done for thepurposes of, in connection with, or incidental to and

activities done as part of, the preparation for the activity


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and in the termination of, the activity;

(q) input tax in relation to the purchase of goods, means

the proportion of the price paid by the buyer for the

goods which represents tax under this Regulation;

(r) net tax means the amount calculated for a tax periodunder section 11;

(s) non-creditable goods means the goods listed in the

Sixth Schedule;

(t) notification means a notification published in the

Official Gazette and the expression notify shall be

construed accordingly;

(u) Official Gazette means the Daman and Diu Gazette;

(v) prescribed means prescribed by rules made under this

Regulation;

(w) registered dealer means a dealer who has been granted

a certificate of registration under section 19;

(x) related person means a person who is related toanother person (referred to in this definition as a

dealer) if the person -

(i) is a relative of the dealer;

(ii) is a partnership of which the dealer is a partner;

(iii) is a company in which the dealer [either alone or

alongwith another person who is, or persons who are,

related to the dealer under any of the sub-clauses (i),

(ii), (iv), (v) or (vi) of this clause] directly or

indirectly holds forty per cent. or more of stock orshares or voting rights;

(iv) is a person who [either alone or alongwith another

person who is, or other persons who are, related to

the person under any of the sub-clauses (i), (ii), (iv),

(v) or (vi) of this clause] directly or indirectly owns

forty per cent. or more of outstanding voting stock or

shares of the dealer or voting rights;

(v) is a company in which forty per cent. or more of

outstanding voting stock is held directly or indirectly

by a person [either alone or alongwith another

person who is, or other persons who are, related to

the person under any of the sub-clauses (i), (ii), (iv),(v) or (vi) of this clause] who also holds forty per cent. or

more of the outstanding voting stock or shares of the

dealer; or

(vi) is controlled by the dealer, or a person whom the

dealer controls, or is a person who is controlled by

the same person who controls the dealer;

(y) relative means a relative as defined in clause (41) of

section 2 of the Companies Act, 1956;

(z) sale, with its grammatical variations and cognate

1 of 1956.


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expression, means any transfer of property in goods by

one person to another for cash or for deferred payment

or for other valuable consideration and includes-

(i) a transfer of goods on hire-purchase or othersystem of payment by instalments, but does not

include a mortgage or hypothecation of, or a

charge, or pledge, on goods;

(ii) supply of goods by a society (including a co-

operative society), club, firm, or any association

to its members for cash or for deferred payment

or for commission, remuneration or other

valuable consideration, whether or not in the

course of business;

(iii) transfer of property in goods by an auctioneerreferred to in sub-clause (vii) of clause (i) of this

section, or sale of goods in the course of any

other activity in the nature of banking, insurance

which in the course of their main activity also

sells goods possession of which has been taken

from borrower or reclaimed;

(iv) transfer, otherwise than in pursuance of a

contract, of property in any goods for cash,

deferred payment or other valuable

consideration;

(v) transfer of property in goods (whether as goods

or in some other form) involved in the executionof a works contract;

(vi) transfer of the right to use any goods for any

purpose (whether or not for a specified period)

for cash, deferred payment or other valuable

consideration;

(vii) supply, by way of or as part of any service or inany other manner whatsoever, of goods, being

food or any other article for human consumption

or any drink (whether or not intoxicating),

where such supply or service is for cash,

deferred payment or other valuable

consideration;(viii) every disposal of goods referred to in sub-clause

(ix) of clause (i) of this section,

and the expressions sell, buy and purchase, shall, with all

their grammatical variations and cognate expressions, be

construed accordingly;

(za) sale price means the amount paid or payable as

valuable consideration for any sale, and includes


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(i) the amount of tax, if any, for which the dealer isliable under section 3;

(ii) in relation to the transaction, being delivery ofgoods on hire-purchase or any system of

payment by instalments, the amount of valuableconsideration payable to a person for such

delivery including hire-charges, interest and

other charges incidental to such transaction;

(iii) in relation to transfer of the right to use anygoods for any purpose (whether or not for a

specified period), the valuable consideration or

charges received or receivable for such transfer;

(iv) any sum charged for anything done by thedealer in respect of goods at the time of, or

before, the delivery thereof;

1 of 1944.

52 of 1962.

5 of 1964.

(v) the amount of duties levied or leviable on the goodsunder the Central Excise Act, 1944 or the Customs Act,

1962, or the Goa, Daman and Diu Excise Duty Act,

1964, as extended to the Union territory of Daman and

Diu, whether such duties are payable by the seller or

any other person;

(vi) the amount received or receivable by the seller by wayof non-refundable deposit which has been received or is

receivable whether by way of separate agreement or

not, in connection with, or incidental to or ancillary to

the sale of goods; and

(vii) in relation to works contract, the amount of valuable

consideration paid or payable to a dealer for the

execution of the works contract,

but does not include -

(a) any sum allowed as discount which reduces the sale

price according to the practice normally prevailing in

the trade;

(b) the cost of freight or delivery or the cost of installationin cases where such cost is separately charged;

(zb) Schedule means a Schedule appended to this

Regulation;

(zc) sufficient proof means such documents, testimony or

other evidence relevant for deposit of tax, filing of

return or proceedings under this Regulation and which

may be prescribed;

(zd) tax means tax leviable and payable under this

Regulation;


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(ze) taxable quantum means the amount specified in sub-

section (2) of section 18 ;

(zf) tax invoice means a tax invoice of the nature referred

to in section 50;

(zg) tax period means such period as may be prescribed;(zh) tax fraction means the fraction calculated in

accordance with formula given below:-

r / (r+100)

where r is the percentage rate of tax applicable to the sale

under this Regulation;

(zi) transporter means any person who, for the purposes of,

or in connection with, or incidental to, or in the course of,

his business, transports or causes to transport goods, and

includes any person whose business consists of shipping,

air cargo, inland container depot, container freight

station, courier service, airline or railways;

(zj) turnover of purchases means the aggregate of the

amounts of purchase price (including any input tax) paid

or payable by a person in any tax period;

(zk) turnover means the aggregate of the amounts of sale

price received or receivable by the person in any tax

period, as reduced by any tax for which the person is

liable under section 3;

(zl) value of goods means the fair market value of the

goods and includes insurance charges, excise duties,

countervailing duties, tax paid or payable under the

Central Sales Tax Act, 1956, transport charges, freight

charges and all other charges incidental to the sale of thegoods;

74 of 1956.

(zm) works contract includes any agreement for carrying

out, the construction of building, manufacture,

processing, fabrication, erection, installation, fitting out,

improvement, repair or commissioning of any moveable

or immovable property, whether for cash or the deferred

payment or for other valuable consideration;

(zn) year means the financial year.

CHAPTER II

INCIDENCE AND LEVY OF TAXIncidence of tax. 3. (1) Every dealer, who is registered under this Regulation or

required to be registered under this Regulation, shall be liable to

pay tax calculated in accordance with section 11.

(2) The tax calculated under sub-section (1) shall be payable

on every sale of goods effected by a dealer (a) on and from the day on which the dealer was required to

be registered under this Regulation; or

(b) during the period he is registered as a dealer under this

Regulation.


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(3) The liability to pay tax shall be on the sales effected

after a dealer exceeds the taxable quantum.

(4) The net tax shall be paid by a dealer within twenty-eightdays from the last day of his tax period.

(5) Tax shall be paid in the manner specified in section 36.

(6) Every dealer, who becomes liable to pay tax under this

Regulation on the sale of goods, shall continue to be so liable

unless his taxable turnover during any preceding consecutive

twelve months or such further period as may be prescribed, has

remained below the taxable quantum and on the expiry of such

twelve months or further period his liability to pay tax shall

cease:

Provided that any dealer, whose liability to pay tax

under this Regulation ceases for any other reason, may apply for

the cancellation of his certificate of registration on or after the

date on which his liability to pay tax ceases, and on such

cancellation, his liability to pay tax shall cease:

Provided further that a dealer shall remain liable to paytax until the date on which his certificate of registration is

cancelled.

(7) Every dealer, whose liability to pay tax under this

Regulation has ceased or whose certificate of registration has

been cancelled, shall, if his turnover calculated from the

commencement of any year (including the year in which the

registration has been cancelled), at any subsequent day exceeds

the taxable quantum within such year, be liable to pay such tax

on and from the date on which his turnover subsequently

exceeds the taxable quantum, on all sales effected by him on and

after that day.

(8) Where it is found that any person registered as a dealer

ought not to have been so registered, then notwithstandinganything contained in this Regulation, such person shall be

liable to pay tax for the period during which he was so

registered.

(9) If any person who transports goods or holds goods in

custody for delivery to, or on behalf of any person, on being

required by the Commissioner

(a) to furnish any information in his possession in respect of

the goods; or


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(b) to permit inspection thereof,

fails to furnish such information or permit such inspection, then,

without prejudice to any other action which may be taken

against such person, under this Regulation or any other law forthe time being in force, a presumption may be raised that the

goods in respect of which he has failed to furnish such

information or permit such inspection, are owned by him and are

held by him for sale in Daman and Diu and the provisions of this

Regulation shall apply accordingly.

Explanation.- For the removal of doubts it is hereby declared

that the tax levied under this section shall apply to every

(a) sale (including a sale by way of instalment or hire-

purchase) of goods, made on and after the date of

commencement of this Regulation;

(b) sale by way of the transfer of a right to use goods, to the

extent that the right to use goods is exercised after the date of

commencement of this Regulation.

Rates of tax. 4. (1) The rates of tax payable on the taxable turnover of a

dealer shall be-

(a) in respect of goods specified in the Second Schedule, at

the rate of one per cent.;

(b) in respect of goods specified in the Third Schedule, atthe rate of four per cent.;

(c) in respect of goods specified in the Fourth Schedule, atthe rate of twenty per cent.;

(d) in the case of any other goods, not specified in the First,

Second, Third and Fourth Schedules, at the rate of

twelve and a half per cent.:

Provided that the rate of tax on packing materials or

containers shall be the same as the rate at which the goods so

packed or contained are chargeable to tax.

(2) Subject to such conditions as it may impose, the

Government may, if it considers it necessary so to do in the

public interest, by notification, specify a lower rate of tax than

rate of tax specified under clauses (a) to (d) of sub-section (1).

(3) Every notification made under sub-section (2) shall be laid,

as soon as may be after it is made, before each House ofParliament, while it is in session, for a total period of thirty days

which may be comprised in one session or in two or more

successive sessions, and if, before the expiry of the session

immediately following the session or the successive sessions


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aforesaid, both Houses agree in making any modification in the

notification or both Houses agree that the notification should not

be made, the notification shall thereafter have effect only in such

modified form or be of no effect, as the case may be, so,

however, that, any such modification or annulment shall bewithout prejudice to the validity of anything previously done

under that notification.

5. (1) For the purposes of this Regulation, taxable turnover

means the turnover of a dealer during the tax period which

remains after deducting therefrom -

(a) the turnover of sales not liable to tax under section 7;

and

(b) the turnover of sales of such goods which are exempt

under section 6.

(2) (a) In the case of turnover arising from the execution of a

works contract, the taxable turnover means so much of turnover

which represents the price and other charges in relation to goods

in such works contract subject to such conditions as may be

prescribed.

(b) Where the amount of price and other charges in relation to

the goods in such contract is not ascertainable from the terms

and conditions of the contract, the amount of such price and

other charges shall be calculated as the sale price stipulated in

the contract as reduced by the prescribed percentage.

Determination oftaxable turnover.

Explanation.- For the removal of doubts, it is hereby declaredthat where an amount is paid or received prior to the date of

commencement of this Regulation in respect of a sale orpurchase occurring after the date of commencement of this

Regulation, and the person calculates his turnover or turnover of

purchases based on amounts paid and received, the amount shall

be treated as forming part of the persons turnover or turnover of

purchases in the tax period in which the sale or purchase occurs.

6.(1) The sale of goods specified in the First Schedule shall

be exempt from tax:

Provided that the Government may, by notification,specify the conditions and exceptions, if any, for the purposes of

such exemptions.

(2) Where a dealer sells capital goods used by him on and

from the time of purchase exclusively for purposes other than

making non-taxed sale of goods, and has not claimed a tax credit

in respect of such capital goods under section 9, the sale of such

capital goods shall be exempt from tax.

(3) Where any dealer has purchased any goods on the basis

of a declaration or certificate under any order or scheme referred

to in sub-section (5) and

Sale of certain goodsexempt from levy of

tax.


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(a) any of the conditions subject to which such exemption

was granted, or

(b) any of the recitals or the conditions of the declaration,

or certificate,

are not complied with for any reason whatsoever, then, without

prejudice to the other provisions of this Regulation, such dealer,shall, notwithstanding that such dealer or person was not liable

to pay tax under any other provisions of this Regulation, be

liable to pay tax on the sale price of the goods at the rates

specified in section 4 and accordingly the dealer, who has

become liable to pay tax under this sub-section shall, file a

return in the prescribed form to the prescribed authority within a

prescribed time, and include the sale price of such turnover in

his return, and pay the tax in the prescribed manner.

(4) The tax due from any dealer referred to in sub-section

(3) shall be assessed and tax recovered as if the dealer is a dealer

liable to be proceeded against under the provisions of this

Regulation.

(5) Subject to such conditions as the Government may, by

notification, specify, all exports from the export, oriented unit,

electronic hardware and technology park, software technology

park unit and the special economic zone located within Damanand Diu, shall be exempted from the levy of tax.

Explanation. For the purposes of this sub-section, export

oriented unit, electronic hardware and technology park,

software technology park unit and the special economic

zone shall mean the delineated area as may be notified by the

Central Government to be such Unit or Park or Zone, as the

case may be.

(6) In a case where a dealer or a class of dealers had been

granted exemption before the commencement of this Regulation

from levy of tax under the Daman and Diu Sales Tax Act, 1964

repealed by section 106, the Government may, by general or

special order, published in the Official Gazette, provide for a

deferral scheme (including a scheme providing the manner in

which such exemption from tax shall be continued) or grant

exemption from levy of tax to such dealer or class of dealers and

such deferral scheme or exemption shall be for the remainingperiod for which the dealer or class of dealers had been

exempted under the Act so repealed.

4 of 1964.

Certain sales notliable to tax.

7. Nothing contained in this Regulation or the rules made

thereunder shall be deemed to impose or authorise the

imposition of tax on any sale of goods when such sale takes

place -

(a) in the course of inter-state trade or commerce; or

(b) outside Daman and Diu; or

(c) in the course of import of the goods into, or, export of


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74 of 1956.

the goods out of, the territory of India.

Explanation.- Sections 3, 4 and 5 of the Central Sales Tax Act,

1956 shall apply for determining whether or not a particular sale

takes place in the manner specified in clause (a) or clause (b) or

clause (c) of this section.

8. (1) The provisions of this section shall apply -

(i) where, in relation to the sale of goods by any dealer

(A) such sale has been cancelled; or

(B) the nature of such sale has been varied or altered; or

(C) the consideration agreed for such sale has been altered

by agreement with the recipient, whether due to the

offer of a discount or for any other reason; or

(D) the goods or part of the goods sold have been returned

to the dealer; or

(E) the whole or part of the price payable by the buyer for

the purchase of the goods has been written-off by the

dealer as a bad debt; and

Adjustments to tax.

(ii) the dealer has, in relation to the sale of goods,

(A) provided a tax invoice in relation to such sale and the

amount shown therein is not the tax properly

chargeable on that sale; or

(B) furnished a return in relation to such sale and has

accounted for an amount of tax on that sale which is not

the amount properly chargeable on that sale.

(2) Where a dealer has accounted for an amount of tax

improperly charged as referred to in sub-section (1), the dealer

shall make an adjustment in calculating the tax payable in thereturn for the tax period during which it has become apparent

that the tax is improperly charged.

(3) If the tax payable in relation to the sale referred to in

sub-section (1), exceeds the tax actually accounted for by the

dealer, the amount of the excess tax shall be deemed to accrue

during the tax period in which the adjustment is made, and such

excess tax shall not be attributable to any earlier tax period.

(4) If the tax actually accounted for exceeds the tax payable

in relation to the sale referred to in sub-section (1), the amount

of shortfall in tax shall be reduced from the tax payable by the

dealer during the tax period in which the adjustment is made,

and such shortfall in tax shall not be attributable to any earlier

tax period.


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(5) Where a dealer sells goods which have been used -

(a) partly for making the sales subject to tax under this

Regulation or sales not liable to tax under section 7;

and

(b) partly for other purposes,

the amount of tax on the sale of the goods shall be the higher of

the following : -

(i) A (A x B / C); or

(ii) A B;

where

A = the tax for which the dealer shall be liable in respect of

the sales other than the tax liability arising under this

section;

B = the amount by which the tax credit of the dealer in

respect of the goods was reduced under sub-section (4)of section 9;

C = the amount of the tax credit before reducing tax credit

under sub-section (4) of section 9.

Tax credit. 9.(1) Subject to the provisions contained in sub-section (2), a

dealer, who is registered or is required to be registered under this

Regulation, shall be entitled to a tax credit in respect of the

turnover of purchases made during the tax period where the

purchase have been made as a dealer and the goods are meant to

be used directly or indirectly by him for the purpose of making

(a) the sales which are liable to tax under section 3; or(b) the sales which are not liable to tax under section 7.

(2) No tax credit shall be allowed

(a) in the case of purchase of goods from a person who is

not a registered dealer;

(b) for the purchase of non-creditable goods specified in

the Sixth Schedule;

(c) for the purchase of goods by a person which are to be

used as a part of the structure of a building owned or

occupied by such person.

Explanation.- For the removal of doubts, it is hereby declared

that a tax credit shall be allowed in respect of the goods and

building materials which are purchased by a person either for the

purposes of re-sale without any alteration, or for the

performance of a works contract in respect of a building owned

or occupied by another person; and

(d) for the goods purchased from a dealer who has opted to

pay tax under section 16;


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(3) The amount of the tax credit to which a dealer is entitled

in respect of the purchase of goods shall be the amount of input

tax arising during the tax period as reduced in the manner

specified in sub-sections (4) and (6).

(4) Where a dealer has purchased goods and the goods are

to be used partly for the purpose of making the sales referred to

in sub-section (1) and partly for other purposes, the amount of

the tax credit shall be reduced proportionately.

(5) Every dealer shall determine, in fair and reasonable

manner, the extent to which the goods are used in the manner

specified in sub-section (4):

Provided that in case the Commissioner is of the opinion

that the manner determined by the dealer is not fair andreasonable, he may -

(a) after recording the reasons in writing, reject the method

adopted by the dealer and calculate the amount of tax

credit after determining such extent in a fair and

reasonable manner; or

(b) in consultation with the Government, specify, by

notification, the methods for calculating the amount of

tax credit or the amount of any adjustment or reduction

of a tax credit in a case or a class of cases.

(6) Where

(a) a dealer has purchased goods (other than capital goods)

for which a tax credit arises under sub-section (1); and

(b) the goods so purchased or goods manufactured out of

such goods so purchased are to be exported from

Daman and Diu, by way of transfer to a

(i) consignment agent who is not residing in

Daman and Diu and such transfer is not by way of sale

in the Daman and Diu; or

(ii) branch of the dealer when such branch is

located outside Daman and Diu and such transfer is not

by way of sale in the Daman an Diu,

the amount of the tax credit shall be reduced by such percentage

as may be prescribed.

(7) No tax credit shall be allowed under this section for -

(a) the purchase of goods from an unregistered dealer;

(b) the purchase of goods which are used exclusively for

the manufacture, processing or packing of goods

specified in the First Schedule.


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(8) The tax credit shall be claimed by a dealer only if he

possesses a tax invoice at the time, prescribed under section 26

or section 27, for filing the return for the tax period.

Explanation .- For the removal of doubts, it is hereby declared

that-

(i) tax credits arising under this section shall be allowed

only for

(a) a purchase, including a purchase under an instalmentsale and hire-purchase of goods, made on and after the

date of commencement of this Regulation; or

(b) a purchase by way of the acquisition of a right to usegoods, to the extent that the right to use goods is

exercised after the date of commencement of this

Regulation;

(ii) Nothing contained in this section shall prevent anyperson from claiming tax credit allowed under section 14.

Adjustment to taxcredit.

10.(1) Where any purchaser has been provided by the seller

with a credit note or debit note under section 51 or if he returns

or rejects goods purchased, as a consequence of which the tax

credit, claimed by him in any tax period in respect of which the

purchase of goods relates, becomes short or excess, he shall

compensate such shortfall or excess by adjusting the amount of

the tax credit allowed to him in respect of the tax period in

which the credit note or debit note had been issued or goods are

returned.

(2) If goods which have been purchased were ,-

(a) intended to be used for any of the purposes specified

under sub-section (1) of section 9 but are subsequently

used, fully or partly, for purposes other than those

specified under the said sub-section; or

(b) intended for purposes other than those specified under

sub-section (1) of section 9, but are subsequently used,

fully or partly, for any of the purposes specified in the

said sub-section,

the tax credit claimed in respect of such purchase shall bereduced or increased, as the case may be, for the tax period

during which the said utilisation has taken place.

(3) Where

(a) the goods were purchased by a dealer;

(b) the dealer claimed a tax credit in respect of the goods,

and the amount of tax credit has not been reduced under

sub-section (6) of section 9; and

(c) the goods are exported from Daman and Diu, other than


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by way of a sale, to a branch of the dealer or to a

consignment agent,

the dealer shall reduce, by the proportion prescribed under sub-

section (6) of section 9, the amount of tax credit initially claimedby him.

(4) If goods, which have been purchased by a dealer,

(a) were intended to be used for any of the purposes

specified under sub-section (1) of section 9; and

(b) are subsequently used as a part of structure of a

building owned or occupied by him,

the tax credit claimed in respect of such purchase shall be

reduced in the tax period during which such use takes place.

11.(1) The net tax payable by a dealer for a tax period shall be

the amount calculated by the formula given below:-

Net Tax = O I C

Where -

O = the amount of tax payable by the person at the rates

specified in section 4 in respect of the taxable turnover

arising during tax period, after making any adjustments

to the tax as required by section 8;

I = the amount of the tax credit arising during the tax period

to which the person is entitled under section 9, after

making any adjustments to the tax credit as required bysection 10;

C = the amount, if any, brought forward from the previous

tax period under sub-section (2).

Calculation of nettax.

74 of 1956.

(2) Where the net tax of a dealer calculated for a tax period

under sub-section (1) amounts to a negative value, the dealer

shall-

(a) adjust the said amount in the same tax period against the

tax payable by him under the Central Sales Tax Act,

1956, if any; and(b) carry forward the surplus amount, if any, after making

adjustments under clause (a) to the next tax period within

the same financial year.

(3) Where the net tax of the dealer at the end of the

financial year is a negative value, the dealer shall be entitled to

claim a refund of any excess amount of tax and the

Commissioner shall deal with claim of refund in the manner

specified in sections 38 and 39:

Provided that the dealer may opt to adjust the refund


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under this sub-section as a tax credit in any succeeding tax

period falling in the next financial year.

Time at whichturnover, turnoverof purchases and

adjustments arise.

12.(1) Subject to sub-sections (2), (3) and (4) , the amount ofthe turnover and the turnover of purchases of a dealer during any

tax period shall be the amount recorded in the books of account

of the dealer, where those accounts are regularly and properly

prepared and maintained, under this sub-section so as to give a

true and fair view of his business.

(2) The Commissioner may, having regard to trade or

accounting practice, by notification,

(a) allow certain classes of dealer to record turnover on the

basis of the amounts paid or received by such dealer; or

(b) require certain classes of dealer to record turnover onthe basis of the amounts payable or receivable by such

dealer.

(3) Where a dealer intends to change the method ofdetermining the turnover and turnover of purchases, he shall

make the change with the approval of the Commissioner and the

Commissioner may grant such approval, subject to such terms

and conditions as he may, having regard to trade or accounting

practice, deem fit.

(4) The Government may prescribe the period for which

turnover of a dealer, turnover of purchases made by a dealer andadjustment of tax or adjustment to a tax credit by a dealer shall

be treated as arising for a class of transactions during that

period.

CHAPTER IIISPECIAL PROVISIONS RELATING TO USED GOODS, COMPOSITIONOF TAX, AND TRANSACTION BETWEEN RELATED PERSONS, ETC.

Provisions of this

Chapter tooverride

provisions ofChapter II.

13. The provisions of this Chapter shall have effect,

notwithstanding anything inconsistent therewith contained in

any provisions of Chapter II.

Treatment of

stock broughtforward duringtransition.

14.(1) Within a period of four months of the commencement of

this Regulation, all registered dealers desirous to claim the tax

credit referred to in sub-section (2), shall furnish to the

Commissioner a statement, in the form as may be prescribed,

containing details of their trading stock, raw materials and

packaging materials for trading stock (in this section referred to

as opening stock) which

(a) is held in Daman and Diu on the date of the

commencement of this Regulation;

(b) was purchased by the dealer after the 1st

day of April,


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2004.

(2) If

(a) the dealer has furnished the statement referred

to in sub-section (1);

(b) the tax has been paid in respect of opening stockin accordance with the provisions of the Daman

and Diu Sales Tax Act, 1964, as it stood before

its repeal by section 106, at the point specified

by the Government under section 8 of the said

Act at full rate of tax specified in the Schedules

to that Act; and

(c) the opening stock has been purchased by the

dealer from a registered dealer for any of the

purposes as are specified in sub-section (1) of

section 9,

4 of 1964.

4 of 1964.

4 of 1964.

the amount of tax paid under the Daman and Diu Sales Tax Act,

1964, as it stood before its repeal by section 106, on such

opening stock, determined in such manner and subject to such

conditions and restrictions and to the extent as may be

prescribed, shall be credited to the registered dealer as a tax

credit under section 9:

Provided that no tax credit under this section shall beallowed unless the dealer has in his possession, invoices issued

by a dealer registered under the Daman and Diu Sales Tax Act,

1964, as it stood before its repeal by section 106, in respect ofthe purchases of such stock:

Provided further that the dealer shall be eligible to claim

the entire amount of credit to which he is entitled if such entire

credit is indicated and claimed in a single statement, which

accompanies a return furnished under this Regulation.

4 of 1964.

(3) No tax credit under sub-section (2) shall be claimed -

(a) for finished goods manufactured out of raw material or

capital goods on which tax had been paid;

(b) for any goods, which were taxable at last point under

the Daman and Diu Sales Tax Act, 1964 as it stood

before its repeal by section 106,held at the time of thecommencement of this Regulation;

(c) in any statement furnished after the expiry of four

months after the commencement of this Regulation; or

(d) for opening stock which is held outside Daman and

Diu.

(4) Every dealer, desirous to claim a tax credit for more

than one lakh rupees in respect of the opening stock referred to

in sub-section (1), shall furnish alongwith the statement a

certificate signed by an accountant in the prescribed form

certifying that the net credit claim specified in such statement is


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true and correct.

4 of 1964.

(5) Notwithstanding anything contained in section 3, if

(a) a person was registered as a dealer under the Daman

and Diu Sales Tax Act, 1964, as it stood before itsrepeal by section 106;

(b) the person is not registered as a dealer under this

Regulation in pursuance of section 24, and such person

has not made an application for grant of certificate of

registration as a dealer within one month of the date of

the commencement of this Regulation; and

(c) on the date of the commencement of this Regulation,

the dealer held opening stock of finished goods in

respect of which tax has not been paid under the

Daman and Diu Sales Tax Act, 1964, as it stood before

its repeal by section 106,

the person shall be liable to pay tax under this Regulation at the

rate or rates specified in section 4 on the fair market value of the

opening stock of finished goods held on the date of the

commencement of this Regulation.

(6) The tax due under sub-section (5) shall be paid within

two months from the date of the commencement of this

Regulation.

4 of 1964.

Levy of tax and

availing of taxcredit on usedgoods.

15.(1) This section applies where

(a) a registered dealer sells used goods;

(b) the registered dealer has purchased goods from a

resident seller who was not registered under this

Regulation;

(c) the goods were purchased either as trading stock for re-

sale without any alteration, or for use as raw materials;

(d) the registered dealer is liable to tax under section 3 on

the sale of the goods or the goods which were

manufactured after use of such goods as raw material or

part of such goods so manufactured, as the case may

be; and(e) the registered dealer has sufficient proof of the amount

paid for the goods.

(2) Subject to the provisions of sub-section (1), the

registered dealer shall be entitled to an amount of tax credit

which shall be the lowest of the following, namely:

(a) the input tax borne by the seller who was residing in

Daman and Diu when he purchased the goods;

(b) the tax fraction of the initial cost of the goods to the seller


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residing in the Daman and Diu;

(c) the tax fraction of the fair market value of the goods at

the time of their purchase by the registered dealer;

(d) the tax fraction of the consideration paid by the registered

dealer for the goods.

(3) Where the amount paid by the registered dealer for the

goods exceeds two thousand rupees, the tax credit shall be

allowed in the tax period during which such goods are sold by

the registered dealer or the goods into which they have been

used are sold by the registered dealer.

74 of 1956.

16.(1) Notwithstanding anything contained in this Regulation,every dealer, whose turnover in the year immediately preceding

the commencement of this Regulation or in any subsequent year

exceeds the taxable quantum under this Regulation but does not

exceed twenty five lakh rupees or such other amount as may be

specified by the Government by notification, shall have anoption to pay tax under this section:

Provided that this section shall not apply to any dealer,

who is registered as a dealer under the Central Sales Tax Act,

1956 or who procures goods from any place outside the Daman

and Diu or sells or supplies goods to any place outside the

Daman and Diu during the year in which he opts to pay tax

under this section.

Composition schemefor specified dealers.

(2) Every dealer, referred to in sub-section (1), at the timeof making an application for grant of certificate of registration

under section 19, shall be required to specify whether he intends

to pay tax under this section:

Provided that in case a dealer opts to pay tax under this

section, he may, by an application made to the Commissioner

within such time and in such manner as may be prescribed,

withdraw his option at any time after the end of the year in

which such option was made:

Provided further that in a case where a dealer withdraws

his option to pay tax under this section, he shall be entitled toclaim credit of the tax paid under this Regulation on the trading

stock, raw material and packaging material held by him in the

Daman and Diu on the date when such option was made subject

to the condition or conditions specified in section 20 and

applicable to such dealer.

4 of 1964.

(3) In case a person who intends to pay tax under this

section and -

(a) who was registered under the Daman and Diu Sales Tax

Act, 1964, at the time of the commencement of this


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Regulation;

(b) whose turnover in the year preceding the commencement

of this Regulation or any subsequent year exceeds the

taxable quantum under this Regulation but does not

exceed twenty five lakh rupees or such other amount asmay be specified by the Government by notification,

he shall specify his intention, within such time and in such

manner as may be prescribed, to pay tax under this section.

(4) Where a dealer opts or intends to pay tax under this

section, net tax payable by the dealer shall be the amountdetermined at the rate of one per cent. of the turnover of the

dealer.

(5) A dealer, who opts or intends to pay tax under this section

shall, -

(a) not compute his net tax under section 11;

(b) not be entitled to claim credit under section 9 or section

14 or section 15;

(c) not be entitled to issue tax invoice;

(d) not collect any amount by way of tax under this

Regulation; and

(e) retain tax invoices and retail invoices for all of his

purchases, as required under section 48.

(6) Every dealer, who opts or intends to pay tax under this

section, shall be required to pay tax on the trading stock, raw

material, packaging material (in this sub-section referred to asopening stock) and finished goods,-

(a) in the case of a dealer referred to in sub-section (3), held on

the date of the commencement of this Regulation; or

(b) in the case of any other dealer, on the date on which he

exercises his option or specifies intention under this

section,

at the rates specified in section 4 on the fair market value of such

opening stock and finished goods where no tax has been paid

which was payable on such opening stock and finished goods

under the Daman and Diu Sales Tax Act, 1964, repealed bysection 106 or under this Regulation.

4 of 1964.

(7) Every dealer shall pay the tax due under sub-section (6)

at any time before he opts to pay tax under this section.

(8) Every dealer, who opts or intends to pay tax under this

section, shall furnish to the Commissioner the proof of payment

of tax referred to in sub-section (6) along with a statement of

opening stock and finished goods, in such form as may be

prescribed.


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Transactions

between relatedpersons.

17. If

(a) a registered dealer enters into a transaction with the related

person for sale of goods or sells or gives otherwise goodswithout adequate consideration to a related person; or

(b) the terms or conditions of such transaction or sale or giving

of goods have been influenced by seller being related with

such person,

the dealer shall not be entitled to a tax credit for the purchase of

the goods or he shall be entitled to the proportionately reduced

tax credit under sub-section (3) of section 9 and the transaction

or sale or giving of goods shall be deemed to be a sale made by

the registered dealer and the sale price of the goods shall be

deemed to be their fair market value.

CHAPTER IVREGISTRATION AND SECURITY

74 of 1956.

18. (1) Every dealer shall apply for grant of certificate of

registration under this Regulation if -

(a) the turnover of the dealer in the year immediately

preceding the commencement of this Regulation

exceeded the taxable quantum; or

(b) the turnover of the dealer in the year during which this

Regulation comes into force or any year thereafter,

exceeds the taxable quantum; or

(c) the dealer is liable to pay tax, or is registered or required

to be registered under the Central Sales Tax Act, 1956:

Provided that a dealer dealing exclusively in goods

mentioned in the First Schedule shall not be required to obtain

certificate of registration under this Regulation.

Compulsory and

voluntaryregistration.

(2) For the purposes of this Regulation, taxable quantumof a dealer shall be five lakh rupees, or such other amount as

may be specified, by the Government, by notification:

Provided that in the case of a dealer who imports for

sale any goods into the Daman and Diu, the taxable quantum

shall be Nil or such other amount as may be specified, by

notification, by the Government.

(3) For the purposes of this section, in case of dealers involved

in execution of works contracts, the taxable quantum shall be

calculated with reference to the total contract amount received.

(4) The taxable quantum of a dealer shall not include

turnover from-


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(a) the sales of capital assets;

(b) the sales made in the course of winding up business

of the dealer.

(5) Any person, who is not required by sub-section (1) to beregistered, but who is a dealer; or intends from a particular date

to undertake the business which would make him a dealer, may

apply for grant of certificate of registration.

19.(1) An application for grant of certificate of registration

shall, be made in the prescribed form, within such time, and

containing such particulars and information and be accompanied

by such fee, security and other documents as may be prescribed.

(2) The Administrator may, by order to be published in the

Official Gazette, specify certain classes of persons who may not

be required to furnish a security.

(3) Where

(a) an applicant furnishes, in the prescribed manner, the

security for the amount as may be prescribed; and

(b) all requirements and provisions of this Regulation for

grant of certificate of registration have been complied

with,

such applicant shall be granted a certificate of registration under

this Regulation.

Registration.

(4) Where the certificate of registration has not been

granted to the applicant within fifteen days from the date on

which the application is made, the Commissioner shall, after

making such inquiries as he deems fit, either

(a) grant certificate of registration forthwith to the applicant; or

(b) issue a notice to the applicant, clearly stating the grounds on

which his application is proposed to be rejected and

allowing him to show cause in writing, within further

fifteen days, why his application should not be rejected:

Provided that where the certificate of registration has

not been granted to the applicant or such applicant has not beenissued a notice by the required date, the applicant shall be

deemed to be registered for the purposes of this Regulation, and

the Commissioner shall grant a certificate of registration to such

applicant.

(5) Where the applicant submits a reply to the notice, under

clause (b) of sub-section (4), the Commissioner may, either

accept the application and grant a certificate of registration to

the applicant, or reject the application for reasons to be recorded

in writing.


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(6) If the applicant fails to submit any reply to the notice

issued under clause (b) of sub-section (4) within the stipulated

time, the application for grant of certificate of registration shall

stand rejected.

(7) Where a registered dealer has furnished a security as a

condition for grant of certificate of registration, such security

shall be necessary for the continuance in effect of the certificate

of registration, unless otherwise provided by the Commissioner.

Effect ofregistration.

20. (1) If a certificate of registration is granted at any timeafter

the commencement of this Regulation and (a) the dealer holds trading stock for the purpose of sale, or

for use as raw materials for the production of trading

stock;

(b) the dealer has paid input tax on the purchase of the

trading stock or raw materials;

(c) the dealer furnishes a statement of its trading stock and

raw materials in the prescribed form to the

Commissioner; and

(d) the dealer possesses sufficient proof of the amount of

input tax in respect of the purchases,

such dealer shall be entitled to a tax credit for the trading stock

or raw materials held by the dealer on the date on which the

certificate of registration come into force:

Provided that the dealer shall claim the entire amount of

tax credit to which he is entitled, in a single claim whichaccompanies the first return furnished by the dealer under this

Regulation.

(2) For the purposes of sub-section (1), the amount of the

tax credit shall be the least of the following, namely: -

(a) the amount of input tax disclosed in the proof referred to

in clause (d) of sub-section (1); or

(b) the tax fraction of the cost of the goods; or

(c) the tax fraction of the fair market value of the goods at

the time of registration; or

(d) the amount specified under sub-section (3) of section 9.

(3) Where the registered dealer specifies in his books ofaccount the turnover on the basis of amounts received and

amounts paid, he shall exclude from his turnover -

(a) any amount received after he has been granted a

certificate of registration in respect of sales made and

such amount relates to the period during which he had not

been granted a certificate of registration under this

Regulation; and


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(b) any amount paid after he is registered in respect of

purchases made and such amount relates to the period

during which he had not been granted a certificate ofregistration under this Regulation.

21.(1) A registered dealer shall inform, the Commissioner in

the prescribed manner, within one month, if he -

(a) sells or otherwise disposes of his business or any part of

his business or any place of business, or effects, or comes

to know of, any other change in the ownership of the

business; or

(b) discontinues his business or changes his place of business

or warehouse, or opens a new place of business, or closes

the businessfor a period of more than one month; or

(c) changes the name, style, constitution or nature of his

business; or

(d) enters into partnership or other association in regard to

his business or adds, deletes or changes the particulars of

the persons having interest in his business.

(2) If any such registered dealer dies, his legal

representative shall, in like manner specified under sub-section

(1), inform the Commissioner.

Amendment ofregistration.

(3) The Commissioner may, after considering anyinformation furnished under this Regulation or otherwise

received and after making such inquiry as he may deem fit,amend from time to time any certificate of registration granted

under this Regulation.

(4) An amendment to certificate of registration made under

sub-section (3) shall take effect from the date of contingency

which necessitates the amendment whether or not information in

that behalf is furnished within the time prescribed under sub-

section (1).

(5) Any amendment to a certificate of registration under this

section shall be without prejudice to any liability for tax or

interest or penalty imposable or for any prosecution for an

offence under this Regulation.

(6) For the removal of doubts, it is hereby declared that

where a registered dealer -

(a) effects a change to the nature of the goods ordinarily

sold; or

(b) is a firm and there is a change in the constitution of the

firm without dissolution thereof; or

(c) is a trustee of a trust and there is a change in the

trustees thereof; or

(d) is a Hindu undivided family and the business of such


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family is converted into a partnership business with all

or any of the members of the family as partners thereof;

or

(e) is a firm or a company or a trust or other organisation,

and a change occurs in the management of theorganisation,

then, merely by reason of the circumstances aforesaid, it shall

not be necessary for the registered dealer to apply for a fresh

certificate of registration and on information being furnished the

certificate of registration shall be amended.

Cancellation ofcertificate of

registration.

22.(1) Where

(a) a registered dealer, who is required to furnish security

under the provisions of this Regulation, has failed to

furnish or maintain such security; or

(b) a registered dealer has ceased to carry on any activity

or business which would entitle him to be registered as

a dealer under this Regulation; or

(c) an incorporated body has been wound up or otherwise

ceases to exist; or

(d) the owner of a proprietorship business dies leaving no

successor to carry on the business; or

(e) in the case of a firm or association of persons, it is

dissolved; or

(f) registered dealer has ceased to be liable to pay tax

under this Regulation; or

(g) a registered dealer knowingly furnishes a return which

is misleading or deceptive in a material particular; or

(h) a registered dealer has committed one or more offences

or contravened the provisions of this Regulation; or

(i) the Commissioner, after conducting proper inquiries, is

of the view that it is necessary to do so,

the Commissioner may, after service of a notice in the

prescribed form and after giving the dealer an opportunity of

being heard, cancel the certificate of registration of the dealer

with effect from the date, as may be, specified by him in thenotice.

(2) Where

(a) a registered dealer has ceased to carry on any activity

which would entitle him to be registered as a dealer

under this Regulation; or

(b) an incorporated body has been wound up or otherwise

ceases to exist; or

(c) the owner of a proprietorship business dies leaving no


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successor to carry on business; or

(d) in the case of a firm or association of persons, it is

dissolved; or

(e) a registered dealer has ceased to be liable to pay tax

under this Regulation,

5 of 1908.

the registered dealer or the dealers legal representative in case

of clause (c) above, shall make an application for cancellation of

his certificate of registration to the Commissioner in the manner

and within the time as may be prescribed.

Explanation.- For the purpose of this sub-section, legal

representative has the same meaning as assigned to it in clause

(11) of section 2 of the Code of Civil Procedure, 1908.

(3) On receipt of such application, if the Commissioner issatisfied that the dealer has ceased to be entitled to be registered,

he may cancel the certificate of registration.

(4) If a registered dealer ceases to be registered, the

Commissioner shall cancel the certificate of registration of the

dealer.

(5) If certificate of registration of a dealer, which has been

cancelled under this section, has been restored as a result of an

appeal or other proceeding under this Regulation, the certificate

of registration of such dealer shall be restored and he shall beliable to pay tax as if his registration had never been cancelled.

(6) If any registered dealer, whose certificate of registration

has been restored under sub-section (5), satisfies the

Commissioner that an excess tax has been paid by him during

the period of his certificate of registration was not in force

which, but for the cancellation of his certificate of registration,

he would not have paid, then the amount of such tax shall be

adjusted or refunded in such manner, as may be prescribed.

(7) Every registered dealer, who applies for cancellation of

his certificate of registration, shall surrender with his applicationthe certificate of registration granted to him and every registered

dealer whose certificate of registration is cancelled otherwise

than on the basis of his application shall surrender the certificate

of registration within seven days of the date of communication

to him of the cancellation.

(8) The Commissioner shall, at intervals not exceeding

three months, publish in the Official Gazette, such particulars as

may be prescribed, of registered dealers whose certificate of

registration has been cancelled.

(9) The cancellation of certificate of registration shall not


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affect the liability of any person to pay tax due for any period

and unpaid as on the date of such cancellation or which is

assessed thereafter notwithstanding that he is not otherwise

liable to pay tax under this Regulation.

Effect ofcancellation ofcertificate of

registration.

23.(1) Every person, whose certificate of registration has been

cancelled, shall pay in respect of all goods held on the date of

cancellation an amount equal to the amount of (a) the tax which would be payable in respect of those

goods if the goods were sold at their fair market value

on that date; or

(b) the tax credit previously claimed in respect of those

goods,

whichever is higher.

(2) Where the dealer has specified in his books of accountthe turnover on the basis of amounts received and amounts paid,

he shall include in the turnover of his last return -

(a) any amount not yet received in respect of sales made

while he was registered as a dealer under this Regulation;

and

(b) any amount not yet paid in respect of purchases made

while he was registered as a dealer under this Regulation.

4 of 1964.

24. (1) Every dealer -

(a) who has been registered under the Daman and Diu Sales

Tax Act, 1964, on or before the commencement of thisRegulation; and

(b) whose turnover, in the year preceding the year in which this

Regulation comes into force, exceeds the taxable quantum,

shall be deemed to be registered under this Regulation from the

date on which this Regulation comes into force.

Registration during

transition.

4 of 1964.

(2) The security furnished by a dealer registered under the

Daman and Diu Sales Tax Act, 1964, and such security being

valid on the date of the commencement of this Regulation, shall

be deemed to have been furnished under this Regulation and

shall be valid under this Regulation for a period of six months

from the commencement of this Regulation or till a fresh

security as required under sub-section (3) is furnished,

whichever is later.

(3) Every dealer referred to in sub-section (1) shall, within a

period of six months of the commencement of this Regulation,

be required to furnish a fresh security under this Regulation:

Provided that the Commissioner may, having regard to

the financial position of the dealer and any other matter which

the Commissioner considers relevant, by notification, exempt a


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class or classes of dealers from the requirement of furnishing a

fresh security under this sub-section.

74 of 1956.

25. (1) The Commissioner may, for the purpose of -

(a) granting a certificate of registration to a person as adealer; or

(b) making a refund under section 38,

require such person to furnish security, for the proper discharge

of obligations by him under this Regulation or under the Central

Sales Tax Act, 1956, for such amount equivalent to the amount

which may be prescribed and in the manner and within such

time, as may be prescribed.

Requirement of

furnishing security.

(2) Notwithstanding anything contained in sub-section (1),the Commissioner may increase, reduce or waive the prescribed

amount of the security, having regard to (a) the nature and size of the business activities of the

person;

(b) the amount of any tax, interest or penalty for which the

person may be, or is likely to become, liable at any time

under this Regulation;

(c) the creditworthiness of the person;

(d) the nature of the security; and

(e) any other matter which the Commissioner considers

relevant.

(3) Where the security or additional security furnished by aperson is in the form of a surety bond and the surety dies or

becomes insolvent, the person shall, within one month of the

occurrence of such event, inform the death or insolvency of such

surety to the Commissioner and execute a fresh surety bond

within three months of such occurrence.

(4) Where the surety bond has been executed in favour of a

person by another registered dealer and the certificate of

registration of such dealer has been either cancelled or he has

closed down his business, the person shall furnish a fresh surety

as may be prescribed and in the manner as stated in sub-section

(3).

(5) The Commissioner may, for good and sufficient cause,

order the forfeiture of the whole or any part of the security

furnished by a person.

(6) Where the security furnished by any person is forfeited

in whole or is rendered insufficient, he shall furnish a fresh

security of the requisite amount or, as the case may be, shall

make up the deficiency in such manner and within such period

as may be specified.

CHAPTER V


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RETURNS

Furnishing ofperiodical returns.

26. Every registered dealer, who is liable to pay tax under

this Regulation, shall furnish to the Commissioner such returns

in the prescribed form for each tax period and by such dates as

may be prescribed.

Furnishing of

other returns.27. In addition to the returns specified in section 26, the

Commissioner may require any person (including an agent or

trustee of such person), whether a registered dealer or not, to

furnish him with such other returns as the Commissioner may

specify and such other returns shall be furnished within such

time and in such form as may be prescribed.

Furnishing of

revised return forrectification of

mistake.

28. (1) If, within four years of the making of an assessment, any

person discovers any mistake or error in any return furnished by

him under this Regulation, and he has, as a result of the mistake,or error, paid less tax than was due under this Regulation, he

shall, within one month after the discovery, furnish a revised

return and pay the tax owed and interest thereon.

(2) If, within four years of the making of an assessment, any

person discovers any mistake or error in any return furnished by

him under this Regulation, and he has, as a result of the mistake

or error, paid more tax than was due under this Regulation, hemay file an appeal against the assessment in the manner and

subject to the conditions stipulated in section 74.

29. (1) Every return under this Chapter shall be signed andverified

(a) in the case of an individual, by the individual himself,

and where the individual is absent from India, either by

the individual or by some person duly authorised by

him in this behalf and where the individual is mentally

incapacitated from attending to his affairs, by his

guardian or by any other person competent to act on his

behalf;

(b) in the case of a Hindu undivided family, by a Karta and

where the Karta is absent from India or is mentally

incapacitated from attending to his affairs, by any other

adult member of such family;

Signing returns.

(c) in the case of a company or local authority, by the

principal officer thereof;

(d) in the case of a firm, by any partner thereof, not being a

minor;

(e) in the case of any other association, by any member of

the association or persons;

(f) in the case of a trust, by the trustee or any trustee; and

(g) in the case of any other person, by some person

competent to act on his behalf.


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43 of 1961.

(2) For the purposes of this section ,-

(a) the expression principal officer shall have the meaning

assigned to it under clause (35) of section 2 of theIncome-tax Act, 1961;

(b) any return signed by a person, who is not authorised under

this section, to sign and verify the return, shall be treated

as if no return has been furnished.

CHAPTER VI

ASSESSMENT AND PAYMENT OF TAX, INTEREST AND

PENALTIES AND MAKING REFUNDS

30. The Commissioner shall direct any person to pay any

amount of tax, interest or penalty or other amount due under this

Regulation after making of an assessment for such amountpayable by such person.

Assessment of tax,interest or penalty.

Self assessment. 31. (1) Where a return is furnished by a person as required

under section 26 or section 27 and which contains the prescribed

information and accompanies the relevant documents required to

accompanied under this Regulation and such person has

complied with the other requirements specified under this

Regulation and the rules and orders made thereunder, an

assessment of the tax payable of the amount specified in the

return shall be deemed to have been made, under this

Regulation, on the day on which such return was furnished.

(2) No assessment shall be deemed to have been made

under sub-section (1), if the Commissioner has already made an

assessment of tax in respect of the same tax period under any

other provision of this Regulation.

Defaultassessment of taxpayable.

32. (1) If any person

(a) has not furnished returns required under this Regulation

by the prescribed date; or

(b) has furnished incomplete or incorrect returns; or

(c) has furnished a return which is not accompanied by the

documents required to be filed alongwith the return under

this Regulation or rules made thereunder; or

(d) has furnished a return which is not in comformity with the

provisions of this Regulation or rules made thereunder,

the Commissioner may, for reasons to be recorded in writing,

assess or re-assess to the best of his judgment the amount of net

tax due for any tax period or tax periods.


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(2) Where the Commissioner has made an assessment under

sub-section (1), the Commissioner shall forthwith serve on

concerned person a notice of assessment of the amount of any

additional tax due for that tax period.

(3) Where the Commissioner has made an assessment under

sub-section (1) and subsequently any further tax is assessed as

due, the amount of further tax so assessed as due shall also be

payable on the same date being the date on which the net tax for

the tax period was due.

Assessment ofpenalty.

33. (1) Where the Commissioner has reason to believe that a

liability to pay a penalty under section 86 has arisen, the

Commissioner, after recording the reason in writing, shall serve

on the person concerned a notice of assessment of the penalty

which has become due under this Regulation.

(2) The amount of any penalty assessed under this section

shall become due on the date on which the notice of assessment

has been served by the Commissioner.

Limitation onassessment andre-assessment.

34.(1) No assessment or re-assessment shall be made by the

Commissioner after the expiry of four years from

(a) the date on which the person furnished a return undersection 26 or sub-section (I) of section 28; or

(b) the date on which the Commissioner made anassessment of tax under section 32,

whichever is the earlier:

Provided that where the Commissioner has reason to

believe that tax was not paid by reason of concealment,

omission or failure to disclose material particulars on the part of

the person, the assessment or re-assessment may be made by the

Commissioner within six years from the dates specified in

clause (a) or clause (b), as the case may be.

(2) Notwithstanding anything contained in sub-section (1),the Commissioner may make an assessment of tax within one

year from the date of any decision of the Appellate Tribunal or

court where the assessment is required to be made in

consequence of, or to give effect to, the decision of the

Appellate Tribunal or court which requires the re-assessment of

the person.

35. (1) Subject to the provisions of sub-sections (2) and (4),

where an amount of tax or penalty has been assessed under

section 32 or section 33, the Commissioner may not proceed to

enforce payment of the amount assessed until two months after

Collection of

assessed tax andpenalties.


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the date of service of the notice of assessment.

(2) Where a person has made an appeal to an assessment or

part of an assessment in the manner provided in section 74, the

Commissioner shall not enforce the payment of any amount in

dispute under that assessment until the appeal is decided by theCommissioner.

(3) Nothing in this section shall stay any proceedings by the

Commissioner or before a court for the recovery of any amount

due under this Regulation

(a) which are not the subject of a dispute before theCommissioner; or

(b) which has not been stayed by the Appellate Tribunal or

Court.

(4) Notwithstanding anything contained in sub-section (1),where an amount of tax or penalty has been assessed by the

Commissioner and he is satisfied that it may not be possible torecover the amount assessed if collection of such amount is

delayed, or it will be detrimental to revenue if the full period of

two months referred to in sub-section (1) is allowed, the

Commissioner may specify a date in the notice of assessment as

the date being earlier than said two months after the date of

service of the notice of assessment.

36. Every person, liable to pay tax, interest, penalty or any other

amount under this Regulation, shall pay the amount to the

Government Treasury of Daman and Diu, or a branch in Daman

and Diu of a bank which may be prescribed, or at such other

place or in such other manner as may be prescribed.

Manner of paymentof tax, penalties andinterest.

Order of

application ofpayments.

37. Where an amount of tax, interest, or penalty is payable by

any person under this Regulation and such person pays in part,

or the Commissioner recovers in part, an amount of such tax,

interest, or penalty due under this Regulation, the amount of tax,

interest, or penalty so paid or recovered shall be adjusted from

interest, penalty and tax payable under this Regulation and

thereafter from the interest, penalty and tax payable under the

Central Sales Tax Act, 1956 if such interest, penalty and tax

payable relate to the sale of goods from the Daman and Diu

under that Act.

74 of 1956.

Refunds. 38. (1) Subject to the other provisions of this section and the

rules made thereunder, the Commissioner shall refund to a

person the amount of tax, penalty and interest, if any, paid by

such person in excess of the amount assessed or deemed to have

been assessed and due from him.

(2) Before making any refund, the Commissioner shall first

apply such excess referred to in sub-section (1) towards the

recovery of any other amount due under this Regulation, or

thereafter from the dues under the Central Sales Tax Act, 1956 if

such dues relate to sale of goods from the Daman and Diu under

74 of 1956.


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that Act.

(3) Subject to the provisions of sub-section (4), any amount

remaining at the end of the financial year after the application of

the excess amount referred to in sub-section (2) shall, at theoption of the dealer, either

(a) be refunded to the person within one year after the date

on which the claim was made for the refund; or

(b) be carried forward to the next tax period as a tax credit in

that period.

(4) Where the Commissioner has issued a notice to the

person under section 58 informing him that an audit,

investigation or inquiry into his business affairs shall be

undertaken, the excess amount referred to in sub-section (2)

shall be carried forward to the next tax period as a tax credit in

that period.

(5) The Commissioner may, as a condition of the payment

of a refund under this section, demand security from the person

pursuant to the powers conferred in section 25.

(6) Notwithstanding anything contained in this section,

wh

VAT Daman Regulation 2005

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Transcript of VAT Daman Regulation 2005